Michael Happe: So James, first of all, good morning. Thank you for the question. As you saw at our Investor Day, a month or so ago, we absolutely have ambitions to grow. We certainly put both net sales and market share targets out for our overall business at higher levels than they are today. The path to overall growth will still continue to be a combination of organic growth, and we believe some smart, well-considered inorganic growth as well. The timing of both of those will be very interesting to see how it plays out because the organic growth will be tied largely to two factors; one, market conditions; and second, our ability to create growth opportunities in the business. I mentioned how we could do that on Barletta. I would say on the RV side, it will have to be through new products and innovation, as much as anything.
The inorganic timing, as James, I know you know, is hard to predict. So we certainly have higher market share ambitions, as we’ve stated during our Investor Day presentation. And in order to reach those by the end of our fiscal 2025 year, we will need to make steady progress over the next three years. That element has been a little bit of neutral here as of late for a variety of headwind factors, but we do anticipate that turning back positive at some point down the road. So I just can’t comment on sort of when some of that can happen. But we’re a very financially healthy company as well, although we stay paranoid about that status. And with Bryan’s leadership, we make sure that we’re structured in a very careful way. But we have the capability to make some inorganic investments as well strategically to match who we want to look like three to five to 10 years down the road.
And so you’ll see that happen as well.
James Hardiman: That’s helpful. And maybe to one of the last points you just made there, the sort of market share environment. Obviously, market share has been a big part of your growth algorithm for a number of years now. That’s maybe stalled out a little bit here as of late. Maybe an update. I know a big part of that is this whole sort of clearing out of Tier 3 product, where do we stand with that? And is there an opportunity this fiscal year to sort of move beyond that and maybe outgrow the industry or under decline in the industry? I guess this is a better way to put that.
Michael Happe: Yes. No. Our expectations for our businesses is that over time, we continue to take reasonable market share gains for who we are as a premium OEM. Most of the pressure we’ve been seeing on market share has been in two spaces. Towable RVs with the, what you cited, James, with the second and third-tier inventory in the field, but also some of the affordability questions that were raised earlier. In the very near-term, consumers are very price conscious. And on the RV side, we’ve also obviously seen other competition come to the market with Class Bs. We have been predicting that for years that it was going to be hard for Winnebago Industries to hold 45% to 50% share when most of our other competitors years ago were not candidly engaged in that category to the degree they are now.
But each of our brands and businesses, both on the RV and the Marine side, have product plans, distribution plans and candidly, marketing and digital plans to make our brands more relevant, more appealing to our end consumers and then hopefully, obviously, with our dealers as well. So again, we watch market share carefully. We don’t talk a lot about dollar share because it’s very difficult to track. I would suggest that our dollar share candidly, is probably doing better than our unit share here in the more recent past because of our ability in the last year to pass through the pricing increases that we were able to do. So again, it’s a balance of market share and profitability that we continue to pursue.
James Hardiman: Got it. I appreciate the candor here. Obviously, it’s a difficult time to predict much, if anything, given the macro uncertainty, but good luck now we’re getting. Thanks guys.
Operator: Thank you. It comes from the line of John Healy with Northcoast Research. Please proceed.
John Healy: Thank you, and thanks for taking my question. Wanted to just get your big picture thoughts, Mike. Just when I look at your comments that you talked about retail of 390 to 400 or so for 2023, if look at that shipment number, you take the lower end of the range. To me, that doesn’t imply that there’s a ton of inventory that is worked down in the industry. So I would just kind of love to understand your logic. And if those numbers kind of shake out? Are we still somewhat elevated going into 2024? I’m just trying to understand kind of some of the logic that kind of goes behind the thought process.
Michael Happe: Yes. Good morning, John. I would say the logic emanates from a bottom-up point of view in this way. We really look at the Towable RV retail. We look at the Motorhome RV retail. We break it down into fifth wheels and travel trailers Class A, B and C. And there will be categories that we believe over the next year is a stable relatively healthy retail environment persists, which could see some actual inventory climb. I’ve mentioned many times before, we haven’t dwelled on it during this call. That we’ve been under pressure, as an example, on certain parts of our Class A business from a supply chain standpoint. And we have not been able to be as competitive as we would like to be on shipment share on Class As because of challenges around some certain key components.
As that relieves itself, we have a choice in the future to work with our dealers to continue to raise some field inventory on certain elements of that sub-segment. As the Class B business grows, as electric products are introduced to the market. There are various spots where we believe field inventory can actually in the RV industry rise carefully. That then is offset by places, particularly around sort of the mainstream Towable RV segments where we believe dealers would prefer to probably have less of those. So just a reminder that the numbers we give you are always macro and there’s various moving pieces to them, and that’s our best guess at this time. But we’ll see how it plays out.
